Revenue more than doubled in the period from $9.3 million to $19 million, business customers grew from 36,000 to 78,000 and offshore revenue rose to 51% of monthly committed revenue.
Mr Young said customer numbers were strong with all territories, except the United States, coming ahead of Forsyth Barr forecasts.
However, ARPU (average revenue per customer) was significantly weaker than Forsyth Barr had expected.
"The main issue is that New Zealand growth has been driven by 'ledger' customers, which are the lowest priced customers. Accountants have been switching their practices to using Xero's ledger product.
"Xero needs the business itself to switch to Xero to get higher ARPU. In essence, the customer mix is worse than we thought."
In contrast, overseas ARPU was significantly stronger because the customer base, at this stage, had a greater mix of businesses taking the full product as the accounting channel was only just starting up, Mr Young said.
Overall the news was mixed, but slanted towards the positive.
While the headline customer growth was "great", the quality was not as good as expected in New Zealand.
Revenue was therefore in line with expectation.
Growth from the United Kingdom and Australia was encouraging and given the relative market size, it was seen as more important in the overall operations, he said.
"Looking ahead to full-year 2013, growth from Australia will be very important. Longer term, the US will determine how successful Xero is," Mr Young said.
Xero chief executive Rod Drury said the company was pursuing a growth agenda and had recently successfully raised $35.6 million to fund that growth.
Xero had become a significant financial technology provider having securely processed more than $20 billion of transactions on behalf of customers in the last quarter and more than $100 billion in transactions in total.
"It was another substantial growth for Xero as the company focused on acquiring customers and growing revenue - as well as building its team."
The company continued to demonstrate that it could execute effectively across multiple regions, innovate and keep delivering a "best in class" product and customer experience, Mr Drury said.
